By William Rusteberg
Self-funded medical plans should rejoice. There is good news on the horizon. No need to purchase stop loss insurance protection anymore. ObamaRe will assume the risk anytime you need it. Beginning in 2014 ObamaRe will become the ultimate insurer of last resort for struggling self-funded plan sponsors. Placing cover for burning buildings has never been easier.
Employers who set up a trust through which defined health benefits are funded are under no obligation to continually fund the trust through unlimited contributions. After all, no employer can commit to unlimited funding for future health care costs – corporate dollars can only stretch so far.
A plan sponsor may elect to fund the trust to a certain, pre-determined annual limit with stipulation in the Plan Document that, if in the event plan assets are depleted during the plan year ,the plan terminates. At that point ObamaRe steps in to assume the risk. Plan participants are guaranteed continued coverage through ObamaRe, an exchange plan with pre-existing conditions covered immediately. No lasers, no declines, no kidding.
Employers who drop conventional stop loss cover in lieu of ObamaRe can mitigate their exposure. Health benefit dollars can be leveraged through cost plus or reference based pricing models. In our experience we have found that paid claims in excess of $100,000 are infrequent while paid claims in excess of $250,000 are virtually non-existent. Plus, $1,000,000 claims simply don’t exist. For example, the TRS ActiveCare plan for Texas school employees with over 280,000 plan participants, had only three (3) claims surpassing the $1 million mark last time we looked at their financials. And the TRS plan does not employ cost effective reimbursement methodologies as is found under cost plus or reference based pricing.
Self funding makes economic sense, especially when you can rely on ObamaRe to step in when you need it the most. And it’s free.